Index Investing is the latest trend since Warren Buffet spoke about it. Here is why people suggest investing in Index Funds, in the last 20 Years - NASDAQ 100 is up +468%, DOW JONES is up +191%, GERMAN DAX is up +163%, S&P500 is up +158% and most surprising is India Sensex return. It is up a whopping +928%.


So should you invest in Index Fund?

Let see below the scenario discussed at  100X Returns through Equities & Wealth Creation through PMS by Mr. Raamdeo Agrawal. A person from the audience asked him, between 1992 - 2003 market returns were flat or negative. It's like almost 10 years which is a very long period. 



Just imagine, if you had invested in index funds from 1992 and waited till 2003 with the negative return, will you continue for the next 10 years? You must reply in the comments below. 

What lies in the Future?

Like all investment product disclaimers: Past performance is no guarantee of future results.

With the change, in Fund category as per SEBI circular, there has been a substantial impact on active funds and it will reflect in there future returns. There has created chaos in the investment community and especially foreign investors. So, in the situation of chaos, everyone prefers safe havens and this is presently reflecting in the index fund return.

If you are someone who is investing in the short term, index investment can provide great returns. But, if you are investing for the long term, there can be a change of hands and investments can again move in favour of active investment. Always remember a higher return can be only with the balance of both investment styles.

Conclusion


As discussed in my last blog, the relationship between Risk and Return is very important. Also, active and passive investments have their own benefits and risk. So, it is very important to plan your financial investment with a combination of both the product. Never be an Extremist or you'll always find the grass greener on another side. 



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